Metropolitan Stock Exchange of India (MSE) has facilitated the country's first tokenised corporate bond issuance under the Securities and Exchange Board of India's (SEBI) Demat 2.0 pilot, marking a significant milestone in India's debt market modernisation. According to reports from The Hindu BusinessLine, the bond was issued by IIFL Finance Ltd through MSE's Electronic Bond Platform (MSE EBP), with Trust Investment Advisors Pvt Ltd serving as the arranger. This represents the first instance of a corporate bond being issued natively on a distributed ledger in India, with ownership records held with statutory depositories and settlement conducted in Central Bank Digital Currency (CBDC). The system combines tokenised securities with the Reserve Bank of India's Central Bank Digital Currency (CBDC) for settlement and uses smart-contract functionality, enabling atomic settlement where securities and payment legs happen simultaneously rather than sequentially.
The pilot launch at Global Fintech Fest 2026 in Mumbai on September 10 featured an expanded leadership presence compared to earlier reports. As reported by The Newsman of India, the initiative brought together key leaders from India's financial and capital-market ecosystem, including RBI Governor Sanjay Malhotra, SEBI Chairman Tuhin Kanta Pandey, NSE Managing Director and CEO Ashishkumar Chauhan, SBI Managing Director and CEO Sundararaman Ramamurthy, and REC Limited Chairman and Managing Director Jitendra Srivastava, IAS. The event was also attended by several other distinguished dignitaries from the financial and technology sectors, highlighting the broad industry support for this technological advancement. The initiative is being led by Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL), with support from Bombay Stock Exchange (BSE), Metropolitan Stock Exchange of India (MSEI) and National Stock Exchange (NSE), along with banks, issuers, investors, National Payments Corporation of India (NPCI) and regulators.
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have made a promising start with India's experiment in tokenised corporate bonds, with three issuances collectively raising ₹1,025 crore in quick succession. REC became the first issuer to tap the framework, raising ₹500 crore through bonds maturing on 31 May 2028 at a coupon of 7.30%, followed by L&T with another ₹500 crore through bonds maturing in three years at a coupon of 7.40% and IIFL Finance with ₹25 crore. As reported by The Financial Express, Manisha Shroff, partner at Khaitan & Co, noted that further issuances can be expected given the initial response to Demat 2.0, particularly as market participants gain greater familiarity with the infrastructure. NABARD Chairman Shaji Krishnan told FE in an interview that the development finance institution would also look at raising funds through tokenised bonds, encouraged by the initial response, highlighting that tokenisation could reduce operating costs, improve execution speed and price discovery, and enhance overall market efficiency.
SEBI has completed the first phase of the Demat 2.0 pilot with three issuers participating, as confirmed by SEBI Chairman Tuhin Kanta Pandey at Global Fintech Fest 2026. The regulatory framework for corporate bonds will remain unchanged, with the pilot focused on changing the technology used for the market rather than creating a separate regulatory structure. The next phase will bring secondary-market trading into the framework, moving beyond the initial issuance phase to test how the technology can work across a broader part of the corporate bond market. According to The Financial Express, Nishchay Nath, founder and CEO of BondScanner, emphasized that the initiative remains a phased pilot that is currently issuance-led and institution-focused, with what will matter being secondary-market depth and the carefully sequenced path to retail participation. NABARD Chairman Shaji Krishnan noted that the real challenge will emerge once tokenised bonds move beyond primary issuance, requiring broader participation, reliable price discovery, sufficient liquidity and integration with existing trading infrastructure.
Market participants believe the current tokenised bond issuances remain largely ceremonial until a functioning secondary market emerges, with Venkatkrishnan Srinivasan, founder of Rockfort Fincap, stating that "the next milestone for Demat 2.0 is not the fourth tokenized bond; it is the secondary market trade." Under Demat 2.0, investors need access to two digital accounts: a wholesale CBDC wallet provided by a participating bank and a separate electronic securities wallet for holding tokenised bonds. Initially, the tokenised bonds purchased cannot be sold for three months, after which a secondary market is expected to emerge as exchanges and market infrastructure providers develop mechanisms to allow trading. However, interoperability remains a key structural issue, with Suresh Darak, founder of Bond Bazaar, noting that "success of this entire tokenization process depends on whether interoperability between different environments can be done." He emphasized that creating another environment risks fragmenting a market that is still developing, particularly as India already has a functioning bond-market ecosystem involving established financing practices.
